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Summary

Analytics and metrics can be frustrating and intimidating for many entrepreneurs but they can reveal hidden money that’s just sitting there waiting for you. Instead of reinventing the wheel, optimizing what is already working can take your business from seven to eight figures and beyond.

Analytics might be the last thing you want to look at but today’s guest is going to explain how you can make it easier for yourself and get the valuable data you need to grow your business. 

Today on #MakingBank, host Josh Felber invites Babak Azad to discuss how he optimized customer acquisition for Beachbody and acquired over 10 million customers in the process. He shares some excellent advice on metrics, measuring what matters, optimizing what’s working, and why you should focus on your brand.

Babak Azad was SVP of Media & Customer Acquisition at Beachbody, creators of P90X, 21 Day Fix and Shakeology. His teams managed all offline and online media, telesales activities and web testing & landing page optimization efforts.

During his tenure, they ran over half a billion dollars in media and acquired over 10 million customers across the phone channel, their website, and on Amazon. He has also worked in corporate development at Napster, as well as founding and launching TONE Magazine, a publication for gyms and yoga studios in the Los Angeles area.

So, tune-in to hear Josh and Babak talk all-things metrics and optimization, as well as…

• The importance of measuring things that actually matter to your business.
• What to consider when trying to find your CPA sweet spot.
• Why you should focus on building a brand and not just building wealth.
• How you can apply all of these lessons to any size business.

And more…

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Key Metrics to 10X Your Business with Guest Babak Azad: MakingBank S2E52

Josh Felber:                          Welcome to Making Bank, I am Josh Felber, where we uncover the success strategies and the secrets of the top 1% so you can amplify and transform your life and your business today. I’m excited for today’s guest, Babak Azad, and I want to welcome you to Making Bank.

Babak Azad:                          Thanks.

Josh Felber:                          And, for the people that don’t about you, I know there’s a big segment of the population that probably knows who you are, but for those few that don’t, how would you tell them who you are and what you do?

Babak Azad:                          Sure. Yeah. By way of background, I think the thing I’m probably most known for is, I was at Beachbody for eight years.

Josh Felber:                          Okay.

Babak Azad:                          So, I got there in January … February of ’07. We had just crossed over 100 million bucks, and so I was fortunate enough to walk into a hundred million dollar business, and I left eight years later. We had just crossed $1 billion.

Josh Felber:                          Wow.

Babak Azad:                          And during my time … So, I built finance and analytics, came from that background. I was a Math major in college, did investment banking in Stanford Business School, kind of more of a traditional route. Didn’t know anything about direct response, network marketing, or any of that, and got in through the only headhunter I knew in LA. Literally one if those things, he called me on a Thursday, I called him back Friday, interviewed Monday, offer Tuesday, gave notice Wednesday.

Josh Felber:                          Wow. [crosstalk 00:01:41].

Babak Azad:                          Yup. Yeah. Sometimes it happens that way.

Josh Felber:                          Yeah. It all synced up properly.

Babak Azad:                          Right. Yeah. So, I built up finance and analytics, very strategic, very analytical kind of approach and operational.

Josh Felber:                          Okay.

Babak Azad:                          You could not pay me enough to be a CFO, had never had a desire to do that, but I wanted more accountability.

Josh Felber:                          Okay.

Babak Azad:                          So, I had influence but not accountability.

Josh Felber:                          Gotcha.

Babak Azad:                          And so we created this role to oversee media and customer acquisition, and so it was TV sales, digital, web testing, tele-sales that we had 10 third-party call centers, social media, and Amazon. And so, it was really the channel side of the DR business.

Josh Felber:                          Sure.

Babak Azad:                          So, during the time that I was overseeing it, we spent over half a billion in media and acquired over 10 million customers. So, it was a cool little run there, and I left in April of ’15.

Josh Felber:                          Okay.

Babak Azad:                          Basically coincided with the birth of my second boy, and left to go start something. The team, very quickly, we figured out it just wasn’t going to work, which was for the best for everyone, and pretty much for the last 18 months or so, I’ve been working with folks on a consulting basis.

Josh Felber:                          Awesome.

Babak Azad:                          Typically a million and a half a month, I’d say up to 20 million at least, kind of, is where I start. I’ve kind of figured out that my skill set is better at scale.

Josh Felber:                          Okay.

Babak Azad:                          The more complex, the more sophisticated, the more moving parts, and then certainly into nine figures. So, what I’m great at is basically helping people find hidden profits, find the cash, and the goal is really to help people get from eight figures to nine figures.

Josh Felber:                          Sweet.

Babak Azad:                          That’s where my sweet spot is, but I’ve also figured out how to think about what I learned at a nine-figure business and how to apply it to seven- and eight-figure, and frankly, even smaller businesses.

Josh Felber:                          Okay.

Babak Azad:                          Yeah. So, that’s it.

Josh Felber:                          That’s awesome. And that’s, I mean, a stellar background of what … I mean, walking into Beachbody where it was at, and then just things lining up. So, you said you didn’t come from the direct response side of things. How did you best fit yourself into that position and really start to learn what all of that was about?

Babak Azad:                          Yeah. You know, I think everyone talks about mentors, and guides, and things like that, and I was very fortunate. There was someone within Beachbody who had been there for a bunch of years. He was going to be moving on to something else. I basically lived in his office for the first few months. Quite literally, I remember being in his office and, you know, I think we just talked about, ultimately, if you’re running a direct response business … I’m very, very big on this. I actually think I’m pretty darn good. I know what I’m great at; I know what I suck at.

Josh Felber:                          Right.

Babak Azad:                          I’m not a copywriter, I’m not a production guy, but I understand how to use information to actually drive the business.

Josh Felber:                          Okay.

Babak Azad:                          And so, the whole customer LTV model, whether you call it unit economics, margin model … We sat down, and we just got into it. And everyone thinks, oh, yeah, it’s a model, right, or it’s an Excel spreadsheet. It’s like, no, no, no. It actually should be driving your business. And I’m happy talk a little more about how I use it, but really I was fortunate that this guy basically taught me a lot of it. And then, a big part of it also was, just start looking.

Josh Felber:                          Right.

Babak Azad:                          And I just stared at Excel spreadsheets, and started digging in, and sometimes that’s what it takes. So, yeah, I’m big on basic reporting, and then, certainly, analysis and insights, too, obviously.

Josh Felber:                          And so, your, kind of, focus was all the analytics, and understanding the numbers pieces, and how that drives everything else. And then you created a team around you, then, to actually … for your traffic and to, I guess, pull the different channels together?

Babak Azad:                          Yeah. Some of those things existed, right? I mean, I walked into a hundred million dollar business, right?

Josh Felber:                          Right.

Babak Azad:                          So, they were doing a lot of things really well. And then, if you looked back, I think a lot of people will probably have a sense of, you think that a bigger business is great, right, in the sense that all their systems, their processes, their people, all that are phenomenal. I think if you look back … Look, I think every business has succeeded in spite of themselves, and if I look back at where Beachbody was when I first walked in and when I left, the level of sophistication and rigor was dramatically better, and it was a relatively unsophisticated approach. They did enough, and they did some great things, obviously, but hopefully over eight more years you’re going to get a lot better.

Josh Felber:                          Sure.

Babak Azad:                          And so, I think a lot of people think that you have to have all these great things in place. And, look, they have the core stuff, and that’s, I think, the key.

Josh Felber:                          Right.

Babak Azad:                          Right? You know, one of the things I talk about is, I left, and we basically didn’t have a CRM or a CMS, and this was a billion dollar business, right?

Josh Felber:                          Oh, wow. Okay.

Babak Azad:                          But again, the core things that drove the business, those were working really well.

Josh Felber:                          Those were working.

Babak Azad:                          And so, yeah, there was a small media team. We really didn’t do much digital.

Josh Felber:                          Okay.

Babak Azad:                          It was like … I think, actually, the head of OPS, at one point, was running search, which was what it was.

Josh Felber:                          Right.

Babak Azad:                          And then, you know, there was obvious traffic and some of those things, but yeah, the joke was, when I first started, if I was in a meeting, there was no one doing the quantitative analysis.

Josh Felber:                          Right.

Babak Azad:                          And it’s a little bit of an exaggeration, but it wasn’t that much of one. And so, we just started building. And one of the things I talk about with folks is, wherever you are, you’ve got to have some basic reporting, and just start with, wherever you are, that’s your starting point, and then you start layering from there.

Josh Felber:                          Sure.

Babak Azad:                          And so, yeah, we started building out the finance team, the analytics team, got to, I don’t know, those teams across them was probably over 10, probably 10, 12 folks, and then it just started kind of going from there.

Josh Felber:                          So, a question. My wife runs a big skin care company. It’s all handmade, organic stuff.

Babak Azad:                          Awesome.

Josh Felber:                          And we’re scaling to over 12 million this year with that, so … And the whole reporting thing, that’s what we’ve been really diving into and trying to figure out, you know, okay, what do we have to have here and here, what is our lifetime value and everything, too. So, if you were going into a business, for example like that, what were some of the basic things, and then the things you start to add as you grow?

Babak Azad:                          So, I’m big on basics and fundamentals, and so I think maybe I should be a better marketer about making things sexy, so I apologize if some things aren’t as sexy as people want. But I think, ultimately, it’s the shiny, bright objects are the distraction, oftentimes, as opposed to, like … Look, I think most people know, if you’re running an online business, traffic, click-through rate, conversion … But my question would be ... Everyone’s like, yeah, sure, but do you actually have it? Are you looking at it? Is someone else looking at it?

Josh Felber:                          Right.

Babak Azad:                          And so, I always … What is it? Peter Drucker said, “That which does not get measured doesn’t get better.” So, whatever you start reporting on, it just automatically gets better. It kind of does happen because people start paying attention, right?

Josh Felber:                          For sure.

Babak Azad:                          So, I think it’s really about, look, each business has got its own particulars, each site has got its own particulars, but ultimately it’s like, what’s the highest level of granularity? Which sounds kind of an oxymoron. What’s the highest level of visibility on your business?

Josh Felber:                          Okay.

Babak Azad:                          And then, also, how do you start chopping it down toward the funnel steps? Right? And so, if you have a three-step process, or a one-step process, start tracking those things step by step.

Josh Felber:                          Okay.

Babak Azad:                          And again, I think I’ve seen a lot of people get intimidated by thinking that other people have it great, or it’s … Look, analytics and all this stuff, especially in that kind of business, is the bane of everyone’s existence, but no one has perfect data. I guess that’s what I will say. It really doesn’t exist, and things like attribution, all this stuff, and I think buzz words … And I kind of want to just tell people, like, there are … No one who is doing that stuff, especially when it comes to attribution, great, and so that doesn’t mean you don’t try to get better at it.

Josh Felber:                          Yeah.

Babak Azad:                          But I think sometimes people don’t do anything because they know they can’t be perfect or 100%, or just, it seems so intimidating, and I think it just … Look, sometimes you’ve just got to start and get going. So, exactly which reports and which things, I mean, I think most people probably have a sense. I’m happy to share it if people want to know that kind of level of detail, but I think it’s more, just start watching the steps in your business and start reporting on them, and then you can start building into more sophistication.

Josh Felber:                          One of the things you mentioned is, you know, people see the numbers and they’re unsexy, and they’re not what … And, I mean, I’ve owned 15 companies since I was 14 years old.

Babak Azad:                          Awesome.

Josh Felber:                          But the last thing I always looked at was the numbers. It was like, cool, cash is coming in, we have some money here, let’s just keep spending thinking it will grow it more, and I think that’s the way a lot of, even people in that six-, seven-figure range are looking at.

Babak Azad:                          Yup.

Josh Felber:                          And like you said, one of the things really is, as we started looking at the numbers, like, “Oh, man. Okay, are we … Whoa, this funnel is actually losing money and it’s not making … you know, by $8,000 because we didn’t do this.” Or we thought we were profitable every month, and you start finding out that you’re, and I guess that’s how you put yourself out of business quick, too.

Babak Azad:                          Right.

Josh Felber:                          I guess, what are, maybe, your top three to five key metrics that you look at, especially when you’re first starting out [crosstalk 00:10:01]?

Babak Azad:                          Yeah. So, I mean, the highest level, cash is king, right? So, at the end of the day it’s like, what’s your cash number at the beginning of the month and at the end of the month, right? Don’t lose sight of that, and I think, especially when you’re paying bills, I don’t think, especially who are in six-figure businesses, are going to lose sight of that, but let’s start with that, right? But, look, assuming you’re running traffic, how much are you spending, look at your click-through rates, so, what are your CPCs, traffic to your site, conversion, revenues.

Josh Felber:                          Okay.

Babak Azad:                          And then it’s a question of, when you think about revenue, and certainly margin, right, and if you’re running affiliate traffic, and I know folks who give away 95%, especially on the first transaction, revenues and margin obviously is a little bit different.

Josh Felber:                          Right.

Babak Azad:                          And whether it’s an info product or a physical product, right? So, I think knowing the cost structure and the margin of an average order, super-super key.

Josh Felber:                          Okay.

Babak Azad:                          And then, how long you look out after, like, when you’re talking about lifetime value, there are a lot of factors that play into that, right, which is, first of all, how much history do you have, how much really happens after that, and cash flow, right?

Josh Felber:                          Sure.

Babak Azad:                          Some folks … I was spoiled. I truly was spoiled at Beachbody. I never thought about break-even.

Josh Felber:                          Okay.

Babak Azad:                          We had a good amount of money in the bank, and frankly, most of our offers broke even relatively quickly, so I wasn’t waiting six months, nine months out, and that just wasn’t the business model. I have a much greater appreciation in the last couple years working with smaller businesses but still very impressive.

Josh Felber:                          Right.

Babak Azad:                          Look, I respect all businesses. Just ’cause some folks aren’t, like, my sweet spot doesn’t mean they’re beneath me. It just means my skillset isn’t as appropriate for that.

Josh Felber:                          Right. It’s where it’s applied [crosstalk 00:11:34].

Babak Azad:                          So I just want to make sure, like, I’ve got respect for whatever business you’ve got going and being out there. But that question of 30-day break-even, 60-day break-even, hopefully over time you start to, kind of, if you need to, you can push out into that and then there’s risk. But look, your traffic numbers, your conversion numbers, your orders, your revenues, upsells, things like that, again, those are all funnel path stuff, right?

Josh Felber:                          Sure.

Babak Azad:                          And then, from the LTV side, I think it’s a similar type of thing of, what do you get day one and beyond, and then what’s the cost structure of all the things you’re getting, right, like shipping, fulfillment, merchant processing, customer service. Essentially, I think, and I have a blog post about this, but it’s basically all the variable … What are all the marginal costs associated with an order?

Josh Felber:                          Okay, sure.

Babak Azad:                          So, if you scale up your media, you don’t generally need to hire another person until you get to a certain point, right?

Josh Felber:                          Right.

Babak Azad:                          And so, if you get another order, what are all the marginal costs you’re going to incur?

Josh Felber:                          Okay.

Babak Azad:                          And that whole model I think is … Again, if you’re running paid media, I don’t know how you run it without understanding the value of a customer.

Josh Felber:                          Right.

Babak Azad:                          ‘Cause, is a $6 CPA good, or is a $50 CPA good? I don’t know, depending on what your business is, right?

Josh Felber:                          Sure.

Babak Azad:                          And I get asked that, frankly, all the time. So, like, “What’s an average CPA on TV?” I’m like, that question doesn’t have meaning without context and without actually an offer.

Josh Felber:                          Sure. That makes sense.

Babak Azad:                          Like, Bowflex or NordicTrack is a, whatever, a $2,000 product. They can afford a different CPA than someone selling ShamWow!

Josh Felber:                          Right. Yeah.

Babak Azad:                          You know, so …

Josh Felber:                          So, one of the things that you were talking about was, when you’re scaling, and building it, and knowing lifetime value, and knowing the order CPA, one of the big things was merchant accounts, and a lot of people don’t factor that merchant account into the total [inaudible 00:13:12] average, and that could be the difference of breaking even or losing money with it, for sure.

Babak Azad:                          Yup. Yup.

Josh Felber:                          And I know … I did some consulting a little while back, and I remember working with businesses, and looking at that, and they’re like, “Oh, yeah, yeah, we got it all,” and then when you come down and you start actually analyzing the numbers and everything … I’m not really a numbers guy, but we had a model or spreadsheet, you know, Excel and stuff. We’d look [inaudible 00:13:33], and you start punching that stuff in, it makes a significant difference.

Babak Azad:                          Yeah, totally.

Josh Felber:                          And, so …

Babak Azad:                          Yeah, I mean, I think a couple thoughts on that. So, one is, I think every business needs sales, but I think particularly when the business is newer and younger, you’ve got to be driving some sales, right?

Josh Felber:                          Right.

Babak Azad:                          So, you’ve got to know your model and all this stuff, but at the end of the day, you can have an operationally tight business, but if you’ve got no sales, that whole thing is moot, right?

Josh Felber:                          Yeah.

Babak Azad:                          And that’s, frankly, why, in some ways, once you’re at 10 to 20 million, then, really, some of the real more … I wouldn’t say advanced, but you spend more time on optimization.

Josh Felber:                          Okay.

Babak Azad:                          Now, you can’t have a horrible model and get to 10 or 20 million, but at the same time, the emphasis on sales has got to be the key, right?

Josh Felber:                          Sure. Oh, yeah.

Babak Azad:                          And so, if you’re not selling, and if you don’t have an offer, I basically tell people, like, two offers, two channels. That’s what you need to build a business.

Josh Felber:                          Okay.

Babak Azad:                          And, you know, you look at Beachbody, that’s what we did, but it’s basically Google and Facebook, those are monster platforms, most people are on those, you know, do that. And so now tying this back to merchant processing, I know people where they’re paying 2%-plus and then other people paying double digits.

Josh Felber:                          Sure.

Babak Azad:                          Monster range, right, and typically it’s the risk profile and all those kinds of things, but that is a monster range, but that can dramatically affect your business. Plus, it’s not just merchant processing. It’s chargebacks, refunds, all those little fees, and honestly, merchant processing is the bane of most people’s existence, right, ’cause how do you get approved. You’ve got Stripe, and PayPal, and all those other things, but still, it’s like people don’t know how to get a clear answer, and every platform has their own things, and you get approved to certain points, and all that stuff. I mean, if you have a relatively clean business, you should have fewer issues.

Josh Felber:                          Sure.

Babak Azad:                          But still, trying to get a straight answer about merchant processing is a big, big deal. And so, yeah, you’ve got to have that part optimized, but also, you’ve got to have sales, and if you don’t have sales, the rest of it doesn’t matter, so that’s how I think about … I don’t know why I thought about that, but I just think that the importance of understanding what’s driving the business, but also if your cost structure is totally out of whack, you’re going to be hampering yourself big time, right?

Josh Felber:                          For sure. One of the things, then, is, to the scaling part you were talking about, where do you think the three biggest challenges for you, when you were at Beachbody, I guess, that you ran into as you were starting to scale and go from that 100 million to a billion dollars?

Babak Azad:                          You know, I think a lot of the issues that bigger companies face, smaller companies face, right?

Josh Felber:                          Sure.

Babak Azad:                          And I think it’s proportionate.

Josh Felber:                          Right.

Babak Azad:                          So, the reality is, every company, frankly, probably hates IT, they work to slow, there are communication challenges, they’re trying to figure out how to scale. I think those are commonalities. It’s just, how many people, the proportionality, distance …

Josh Felber:                          Smaller level, yeah.

Babak Azad:                          Right, right. And trust me, we had our challenges across all of those, and I think every business does. That’s not rocket science, but I think in some ways, hopefully it’s also a little bit encouraging to know that, conceptually, the issue [inaudible 00:16:20] company’s facing, a bigger one does, too. And so, to that point, working offers, right? At the end of the day, if you don’t have a working creative and a working offer …

Josh Felber:                          Sure.

Babak Azad:                          That’s what you need. And so, when we had shows that were working and creative that’s working, it makes things a lot easier, and then the challenge is, how do you maximize the heck out of it, right?

Josh Felber:                          Right.

Babak Azad:                          Which is what my team was responsible for.

Josh Felber:                          Okay.

Babak Azad:                          So, I didn’t do product development or creation of the shows, and so the analogy, I would say, in the Facebook world is, what’s your Facebook video ad, what’s your offer, things like that, but it was optimized from that point on. And so, we were very, very obsessively focused on operational excellence, so once we had something that was working, how do we maximize the heck out of it? Like, all the points in the conversion path, upsells, customer lifetime value, cost optimization, so we were constantly working that.

Josh Felber:                          Right.

Babak Azad:                          But at the core of it, if you don’t have offers, and campaigns, and a channel that works, that’s the key, right?

Josh Felber:                          Right.

Babak Azad:                          When you start talking about the challenges of scale, those were the bigger ones because … And then, if you were making sure your target CPA, and we called it an allowable, your target, basically, what you can afford to get a customer for, the higher that is … And that’s the whole thing. Whoever can afford to pay the most generally can own the media better.

Josh Felber:                          Sure.

Babak Azad:                          And we were just better at that than everyone else.

Josh Felber:                          Right. Yeah. On the media side [crosstalk 00:17:36].

Babak Azad:                          We became better. We had to.

Josh Felber:                          Yeah.

Babak Azad:                          But not just on the managing media side, but if, again, your target CPA is 30% above, like, if you have a target CPA of 15 bucks and all your competitors are at eight, you’re probably going to win.

Josh Felber:                          Right.

Babak Azad:                          Because you can afford more media and different types of media. And so, that was the other part, which was, like, constantly trying to figure out, how do we increase our allowable. And that’s a lot of what I spent time with my clients on is figuring out, where does that optimization happen, right?

Josh Felber:                          Ah, sure.

Babak Azad:                          And so, whether you’re a six-figure business or a 10-figure business, you’ve got to be focusing on that at least to a good extent because if you drive sales and your target CPA is pretty high, that’s a great combination.

Josh Felber:                          Right.

Babak Azad:                          Right? And so, that’s a great place to spend time.

Josh Felber:                          And I know one of the things, too, is, a lot of people look at, “Okay, cool, how can we get the lowest CPA?” which is obviously a good thing, but then also, what you’re saying is, if you’re a business and you have that, I guess, cost structure and profitability built into everything you’re doing, and you can spend more for your CPA, you can then command and control more of the marketplace.

Babak Azad:                          Yeah, absolutely. And so, going back to the comment I made earlier about, what’s a good CPA for TV?

Josh Felber:                          Right.

Babak Azad:                          There’s got to be context to that, right? So, yeah, you want to get the lowest CPA as possible, but … So, my thing was, you know, we had color coding on our reports, right? Green was good, orange is flat, and then red is bad.

Josh Felber:                          Right.

Babak Azad:                          If we were seeing too much green week after week, for me that actually wasn’t a good thing.

Josh Felber:                          Okay.

Babak Azad:                          Because, I mean, again, you’ve got to manage your cash, and there’s got to be all that, but I believe you’ve got to keep pressing until you get into the red and you figure out what is too far. Right? So, unless all the incremental customers are at, like, $1,000 CPA and so your average starts to, like, look at orange … The reality, that’s usually not the case, right?

Josh Felber:                          Right.

Babak Azad:                          So, I think you’ve got to keep pressing, and so this whole thing about economies of scale, and as you scale, your CPA usually goes up, yes, but are you still below your target, right? And so, I’ve heard people talk about it. Just earlier today someone was saying, “Well, on Facebook as you scale, your CPA is going to suffer.” Maybe, but I’ve also seen situations where we literally doubled media and our CPA went down.

Josh Felber:                          Oh, wow. Okay.

Babak Azad:                          It defies logic, but I actually saw that happen enough times that I’m not afraid, and I believe you’ve got to not be afraid to press, figure out what red means for you …

Josh Felber:                          Gotcha.

Babak Azad:                          Again, pay your bills, manage your cash, but I think you’ve got to pressing for that. And so, yeah, you want the lowest CPA, but you also … There’s that math problem, also, of what margin are you going for? Right?

Josh Felber:                          Right.

Babak Azad:                          And so, there’s a sweet spot of, for you, maybe a $5 CPA, the amount you make, and the volume, relative to a $7 CPA might be better and worse. And there’s no perfect on that.

Josh Felber:                          Sure.

Babak Azad:                          You’ve got to combine a bit of art and science to figure out where is that sweet spot, and then, again, I think you’ve got to keep pressing. But from my view, too much green and having too low of a CPA probably means you’re leaving some money on the table.

Josh Felber:                          Right.

Babak Azad:                          And again, I’m assuming things like inventory, and cashflow, and payroll, and all that stuff are okay so that it would allow you to do that. Right?

Josh Felber:                          Right. Right. Yeah, I know. And that makes sense ’cause, I mean, you’re like, “Oh, sweet, we’ve got all the green, we’re hitting the green,” and you think doing well, but then you go back and you have, just like you said, left so much money on the table and everything else, and I think that definitely makes sense. There’s a lot of business entrepreneurs, we don’t see, like, okay, we should keep pressing, keep, really, forcing that, how we can get closer to that red but then find that in between balance.

Babak Azad:                          Yeah, and look, it’s easy to say, like, when I was at Beachbody I said I was spoiled with all this stuff …

Josh Felber:                          Right.

Babak Azad:                          … but I also think … And so, yeah, I’m very cognizant … Look, I have my own business now, right, so I’ve got to figure out what’s my customer LTV, and how do I manage that, and I’m running a little bit of paid, so … I’m a big believer in paid media, so I think that’s … I’d rather be in a predictable, semi-controllable media form than based on some algorithm that some platform may change.

Josh Felber:                          Right.

Babak Azad:                          But I think at the end of the day, I believe in being more aggressive when it comes to pressing things, not when it comes to claims, and not when it comes to that stuff, but in terms of the real, like, how do you push it?

Josh Felber:                          Right. For sure.

Babak Azad:                          But I also know, like, you can’t be oblivious to paying the bills.

Josh Felber:                          Yeah.

Babak Azad:                          So, I just think … And that’s a personal approach. So, maybe you have a little bit less. Maybe you don’t push as hard, right, and so it’s less strain on the system, less strain from an operational side, maybe you can’t afford the inventory yet, so maybe you have to actually manage it a little bit less aggressively as you would prefer.

Josh Felber:                          [crosstalk 00:22:01].

Babak Azad:                          I would also say, to that point, I’ve seen more businesses fail … And actually, I gave a talk last week about this, or at least touched on this, that I’ve seen more businesses fail by trying to grow too quickly rather than growing too slowly, right?

Josh Felber:                          Sure.

Babak Azad:                          And that’s not an excuse to be lazy.

Josh Felber:                          Right.

Babak Azad:                          But I’ve just seen more people try to scale and believe they need to be first mover, the head person right away, as opposed to being at least a little bit more methodical, and understanding the business better, and pushing.

Josh Felber:                          Sure.

Babak Azad:                          But again, don’t be lazy, but I also think this idea of needing to press just for pressing and scale’s sake, I’ve generally seen more companies fail because of that than actually the other side, where people fail because they just grew too slowly.

Josh Felber:                          Right.

Babak Azad:                          I mean of their own accord.

Josh Felber:                          Of their … yeah. For sure. Now that you’re out doing consulting and working with, I guess, not in that hundred to billion dollar range, a hundred million to a billion dollar range, are you seeing similar challenges with these businesses? Are you seeing some different ones that are coming up? And how are you addressing those and working through those?

Babak Azad:                          So, the fundamentals, I think, are generally the same. Although one thing I’m starting to talk about a little bit more is something that I don’t feel like enough people in the IM, and direct response, and performance marketing space talk about, and that’s the word “brand”. And I think two years ago I would never have been here looking at a camera and talking to you, and talking about the word “brand” … And not to say that Beachbody was oblivious to it, not by any stretch, and we had brand managers, but I think from a personal side, I will say that the concept of brand as being much greater concept and topic to talk about, and make sure you’re thinking about in your business, has become dramatically more important. I think just the world is starting to shift that way, and so this idea of branded response …

Josh Felber:                          Right.

Babak Azad:                          And so, look, I’m a Math major, and I came from a DR background in some ways, and that’s kind of how I grew up in this part of the business, and I’m the one talking about this, which I find a little bit ironic or odd.

Josh Felber:                          Right.

Babak Azad:                          But it’s all about customer LTV and enterprise value, but for me, ultimately brand is about, treat the customer well.

Josh Felber:                          Right.

Babak Azad:                          So, I’m not the Madison Avenue person where I just go spend a whole bunch of money and have no hope of tracking any of it, right?

Josh Felber:                          Okay, sure.

Babak Azad:                          And there are times, maybe you do some selective spend for branding.

Josh Felber:                          Right.

Babak Azad:                          Maybe, but ultimately it’s like, what brand are you building, and what do you want people to be associating with your business and your brand?

Josh Felber:                          Sure.

Babak Azad:                          Now, if you’re just an offer person and it’s churn and burn, then you probably don’t care.

Josh Felber:                          Worry about it, yeah.

Babak Azad:                          It’s not for me to judge. You do what you do, but certainly I think if you want to build something sustainable and scalable, I think the word “brand” has to be in the dialogue, and it’s got to come up more than just … And first of all, it’s got to be more than just a word, but it’s got to be, what do people think about our brand? And, you know, I ask people some questions about … For me, one of the easiest one is, if your customer meets you on the street and they find out you’re the owner or the founder, what do they think?

Josh Felber:                          That’s a good question, yeah.

Babak Azad:                          Are they really pissed off, and are they just wanting to walk away, or is it, do they love you, or is at least, like, semi-positive comments?

Josh Felber:                          Right.

Babak Azad:                          Some brands, some technologies, you don’t love them, but at the same time you’re not necessarily going to hug the founder. Sometimes you might. But some brands lend themselves towards the personal connection, in some ways, better than others.

Josh Felber:                          Sure.

Babak Azad:                          But more about, like, if people are going to talk about your brand, what kinds of things are they going to say? And so, it’s like, how hard is the sales process? What’s the upsell process? What’s the return process? You know, some of these things are indicators of, do you actually care about building a brand, and I think, if you want to be in the long game, and again, that’s what I’m playing in, that’s kind of the people generally I play with … Again, not to say that the offer people are bad people.

Josh Felber:                          Right.

Babak Azad:                          It’s a decision you’ve got to make, but I think if you want to build something lasting, you’ve got to have … The word “brand” has got to be part of it, right? This idea of marketing hacks and tactics, really important … And by the way, one last thing on this, the tension between DR and brand is one that I compare to income and wealth.

Josh Felber:                          Okay.

Babak Azad:                          I think, if you want to have wealth, you’ve got to have income, right?

Josh Felber:                          Right.

Babak Azad:                          If you want to build a business, you’ve got to have the DR side ’cause you’ve got to generate cashflow, right?

Josh Felber:                          Right.

Babak Azad:                          So, I’m not saying go and just spend a whole bunch of money or just be oblivious to the income and DR side. It’s more that I think that a lot of people aspire towards wealth, a lot of people aspire towards, or hopefully should aspire towards a brand ’cause that’s where real value is, and frankly, from an acquisitions side, the better your brand, the easier the acquisition is. So, the things that you do on the DR side typically torch the brand and actually make acquisition harder, and so there’s this weird loop that if you’re actually just paying attention a little bit more, the acquisition side becomes that much easier, you’re actually not hurting yourself. And I think people think, “I’ve made more money on the front end,” yeah, but when you look at returns and the cost, then merchant processing, if you have a sketchier business, all that stuff, you’re just making your life more difficult, oftentimes. Even though you think you’re winning in the short term, if you’re a little bit more cognizant on brand, I actually think it makes the short term, actually, a bit easier, too.

Josh Felber:                          And that makes total sense ’cause, I mean, like you said, if you’re having that bad reputation over here, then it’s going to mess up your brand over here.

Babak Azad:                          Right.

Josh Felber:                          In regards to brand, then, where do you see the level where you really need to start paying that importance, attention to the brand? Is it, you’re in that $100,000 a year range, is it that 2 million, is it that 10 million, or as soon as you open the doors kind of thing?

Babak Azad:                          I mean, I think there is a component where, I think, hopefully … The one part about brand that I think a lot of people miss is product.

Josh Felber:                          Okay.

Babak Azad:                          So, I think you’ve got a lot of people who don’t care about their product at all.

Josh Felber:                          Right.

Babak Azad:                          Which is, like … Well then, do you care about your customer at all? And so, I think, assuming you’re coming out with a relatively new product, or if you’re private labeling, or whatever, so, your brand is reflected the moment you start selling something, and so I think it has to begin, I think it’s before day zero of selling, right?

Josh Felber:                          Right.

Babak Azad:                          And so I think that you have to have that sensibility very early on, again, assuming you want to build something. I think you can market your way through worse products.

Josh Felber:                          Sure.

Babak Azad:                          I think the ‘Droid, technology-wise, is better than an iPhone. Apple has figured out how to market it and make the cool-factor of iPhone better, but I think technology-wise, I think most people [inaudible 00:28:09] agree, a ‘Droid is better. I’ve got an iPhone, right? So, people make these decisions, but again, over the long run, I think … Look, Apple’s an exception, right? You can always point to the exception.

Josh Felber:                          Right.

Babak Azad:                          But it’s also, generally speaking, people who have better products generally are going to have a bit of an easier time. They’re not always going to win, but I’d rather have a better product and try to be selling that than a crappier product.

Josh Felber:                          Yeah.

Babak Azad:                          And so, I think … You asked, when do you start thinking about it? I think, as you start developing your product, and then as you start positioning it, and start being thoughtful about what does the brand stand for, and what is the messaging, what is the promise? And that’s all into your hook, and your tactics, and what you have in your copy, what promise do you make to people, and then, are you delivering it? And by the way, your product or service, that’s part of the proof or not.

Josh Felber:                          For sure.

Babak Azad:                          So, I think you start talking about brand, essentially, when you start thinking about, what am I going to market, and what is it that people are actually going to experience? Because, ultimately, we can do as much as we want to tell people what the brand is.

Josh Felber:                          Right.

Babak Azad:                          The customer is the one, ultimately, who defines the brand, right, in that sense. Their experience of it, they’re the one who’s going to talk about it to their friends, their colleagues, their peers, social media, wherever, right? So, there’s only so much in there we can control …

Josh Felber:                          Right.

Babak Azad:                          … at least about what they say, but we can hopefully control their experience, or affect their experience.

Josh Felber:                          Yeah. No, and I think that’s interesting ’cause, I mean, it gives you, kind of, a whole different way to look at what the brand is. It’s not, okay, cool, here’s our logo, here’s this, here’s the product.

Babak Azad:                          Yup.

Josh Felber:                          You know, kind of wrapping, like you said, the whole experience, the customer from purchase, to questions, to returns if they need to, and that kind of thing, and then creating that experience for them.

Babak Azad:                          Yeah. I mean, I’ve heard people talk about, look, your brand is not the logo, and it’s not the colors, it’s all that stuff. Those are representations of it, but ultimately it’s the perspective, the values, and when people think about the word, or your name, or your product or service, what is the feeling they have? What is the experience of it? What has been it? How would they describe it? That’s much more about the brand.

Josh Felber:                          Yeah.

Babak Azad:                          Right? As opposed to just a super-glossy logo, or a cute name, or whatever, again, those are representations as opposed to what really is the brand experience. And that’s why, for me, brand is about customer experience.

Josh Felber:                          Right.

Babak Azad:                          Right? How are you treating the customer in all the touchpoints?

Josh Felber:                          Cool. No, that’s awesome. We’ve just got a couple minutes left. I just wanted to see, I know we were talking a little bit earlier, what are, maybe, three action steps? You know, so, if somebody has their business now and they’re like, “Boom, I just want to take it to that next level.”

Babak Azad:                          Right.

Josh Felber:                          Where would you tell them to start, and then a couple points from there?

Babak Azad:                          Yeah. So, I think a couple things. So, one is an honest question to yourself, do you have an offer and a channel that are working today? And I say that because I had a call yesterday with someone who thought they had something, and there really wasn’t there.

Josh Felber:                          Okay.

Babak Azad:                          So, sounds very obvious, so we’ll just get that out of the way.

Josh Felber:                          Right.

Babak Azad:                          I’m assuming you have an offer and a thing. So, the next thing is, you know … If you’re touching the physical products world, Google, Facebook, and Amazon. You’ve got to be in those places. And for me, then, if you’re an info product, then Google and Facebook. Fine. You don’t have Amazon, although Amazon is starting to get into video now. For me, if you’re in Google, then add Bing, which is, yeah, it’s 5%, but my comment is, “Well, if you don’t want that 5%, can I have it?” and no one has ever said, “Yes.” And I make that, kind of, not just flippantly, but it’s to prove a point. If you have Google working, adding Bing is not that much more work, but you get some pretty high ROI.

Josh Felber:                          Okay.

Babak Azad:                          And at the same time, if you have Facebook working, add Instagram and it’s literally in your Facebook Ads manager.

Josh Felber:                          [crosstalk 00:31:38], yeah.

Babak Azad:                          So, part of it is, leverage what you already have today.

Josh Felber:                          Okay.

Babak Azad:                          And so, that’s the first place from a traffic side.

Josh Felber:                          Sure.

Babak Azad:                          And then it’s, how do you think about adding more relevant stuff to offer to your consumer? Right? So, hopefully it’s good stuff, and essentially, how do you maximize LTV whatever your scale is? The biggest pushback I hear from people is, “Well, I don’t have enough product,” and that’s where, just use an affiliate product. Right?

Josh Felber:                          Right, okay.

Babak Azad:                          So, find a third-party product that is complementary or it’s relevant to your audience.

Josh Felber:                          Sure.

Babak Azad:                          Figure out what is your audience, what kinds of things do they like, and what kinds of things might you test. And what a lot of people do is, they use affiliate traffic to test out product development. And so, if you think, hey, my audience may like an info product, or a health offer, or a dating offer, and you might be thinking about that, you can offer a third-party product, see how that works for your audience, you start generating traffic, they’re the ones delivering the product or service, and you’ve gotten information about what works and what doesn’t. And by the way, that is 100% ethical and legal, right?

Josh Felber:                          Yeah.

Babak Azad:                          And it’s not, you’re just … I mean, I’m assuming you’re not going to plagiarize 100% of what they did, but that’s a way to actually get a sense of what is your consumer and market like.

Josh Felber:                          Cool.

Babak Azad:                          ‘Cause you may think you know them, and you’ve got to test it, ultimately.

Josh Felber:                          Right.

Babak Azad:                          I think that’s one of the biggest things we all learn is, what you think and what happens in reality sometimes doesn’t play out, right?

Josh Felber:                          Right.

Babak Azad:                          So, I think it’s about, find the channels that are working, find the offers, increase customer LTV, get some basic reporting in there, and ultimately, that takes you a good ways.

Josh Felber:                          Sure.

Babak Azad:                          And then, when you want that next level of really digging into cost optimization, right, shipping, and fulfillment, and the super unsexy … I mean, all the cost stuff is unsexy for a lot of people, but it’s margin dollars, right?

Josh Felber:                          Right. Yeah.

Babak Azad:                          You’re writing a check to UPS or to your warehouse. That’s cash.

Josh Felber:                          You’re right. [crosstalk 00:33:28].

Babak Azad:                          So, you know, how do you start working on that stuff, and really get going on there? Again, I’m assuming … And then, the brand stuff that I talked about, that’s really just, that should be overarching. Right?

Josh Felber:                          Right.

Babak Azad:                          I mean, yeah, you may run a little bit on Facebook for branding, or you may do some partnership deals — excuse me — things like that, but ultimately, that should just be overarching and transcendent, and then hopefully over time you start to improve the product.

Josh Felber:                          Cool.

Babak Azad:                          So, I think those are, like … That’s a lot right there, and I think that … I know some people here, maybe, just want to get to seven figures and eight figures.

Josh Felber:                          Right.

Babak Azad:                          But I know that can take people to 100 million, too, and then once you get to that point, then you start worrying about other issues. But, literally, sometimes it’s like, “How do I pay next week?” and whatever. It’s a bit of, like, hey, what kind of offers and channels are you working, and then where are the places you can just start to incrementally add value?

Josh Felber:                          Cool.

Babak Azad:                          And true value, not just dollar value, but value to your consumer, and relevance to them, and then hopefully that translates into value for the business.

Josh Felber:                          Cool. That’s awesome. And I know you mentioned, they may have, like you said, you help them find hidden money sitting there, so, you know, finding those things, if it’s something where they’re worried about paying that next payroll and everything else, possibly there’s certain things that are sitting there, whether it’s an offer, or something they could just quickly add or put together with what they’re already doing to start generating some extra cash and everything for them, so …

Babak Azad:                          Right. Yeah. And one of the easiest places, by the way, is model, not copy, but model off your competition.

Josh Felber:                          Right. Yeah.

Babak Azad:                          See what your competition is doing, and do some research, and yeah, the whole John Wooden thing, focus on yourself, that’s great, but it’s also, sometimes you just need some ideas, or you need … Hey, we’re making things much more difficult. Most of the things out there have been solved by someone else.

Josh Felber:                          Sure.

Babak Azad:                          And unless you’re completely innovative, like … And even Tesla, I would argue, is not even that … I mean, they’re copying other people, right, in many ways, just in a different way.

Josh Felber:                          Right.

Babak Azad:                          But my sense is, most of the people here, and most of the stuff I’m working on, there are models and comps, and so don’t be afraid to look at what other people are doing ’cause you don’t have to reinvent the wheel, right?

Josh Felber:                          Cool. Yeah.

Babak Azad:                          And so, there’s a lot of information and there are a lot of people who are in that environment. And, by the way, if you’re in an entirely new market, that’s a harder battle.

Josh Felber:                          Yeah, for sure.

Babak Azad:                          So, just … You know, I think doing something that other people are doing, that’s not a bad thing, just hopefully you bring your own new spin to it.

Josh Felber:                          Awesome. And what’s one piece of technology that you can’t live without?

Babak Azad:                          I’m a big Evernote guy.

Josh Felber:                          Okay.

Babak Azad:                          Although it’s starting to break for me, so I heard about Bear, so I’ve got to do some research on that. I usually don’t recommend it, so I’m not going to recommend Bear yet, but it’s only for Mac users, and I’m probably the last person on the planet, or at least in this building, that’s on a PC, but I still do some stuff in Excel, so I own that.

Josh Felber:                          Nice.

Babak Azad:                          Macs are easy for people who understand how to use Macs, and apparently I can’t figure that out, but it’s just not better for what I do. But I’m a big Evernote guy.

Josh Felber:                          That’s cool.

Babak Azad:                          So, I use, I mean, for my blog posts I put ideas in there, conference notes I throw in there, and you can share them.

Josh Felber:                          Sure.

Babak Azad:                          Hopefully most people know it, but … There’s also some … If you just look for Evernote Best Practices, I was surprised at some of the things that I came across that I was not doing. So, I was like, “Oh, yeah, it’s a note thing,” but there are ways …

Josh Felber:                          Huh, I’ll have to check that out, yeah.

Babak Azad:                          … like, how you can use it that are actually better.

Josh Felber:                          That’s awesome.

Babak Azad:                          So, yeah, Evernote’s my go-to.

Josh Felber:                          Cool. Well, I really appreciate you coming in today.

Babak Azad:                          Thanks.

Josh Felber:                          I hope you guys were taking a lot of good notes today. Tons of knowledge bombs dropped here by Babak, and just, it was an honor to have you …

Babak Azad:                          Cool. Thank you.

Josh Felber:                          … and spending some time with you, learning about everything, and sharing your knowledge.

Babak Azad:                          Cool. Thanks. It’s been a pleasure.

Josh Felber:                          Yeah. Appreciate it, man. Thank you.

Babak Azad:                          Yup.

Josh Felber:                          I’m Josh Felber. You are watching Making Bank. Get out, and be extraordinary.